India Lifts Government Control Of Aircraft Acquisitions

In an effort to lift the country’s troubled airline industry, India has ended government control of aircraft acquisition by airlines and other operators, enabling domestic carriers to import aircraft without first acquiring special permits.

“Local airlines such as Jet Airways (India) Ltd., SpiceJet Ltd., budget carrier IndiGo and other private aircraft owners and flight training institutes will require just an initial no-objection certificate from the federal government to commence business, following which they will be free to introduce aircraft without any permission,” says Civil Aviation Minister Ajit Singh.

The federal aviation ministry on March 21 scrapped the Aircraft Acquisition Committee (AAC), formed to consider, examine and make recommendations on all proposals for importing aircraft.

Airlines have complained about the government’s control over their purchase plans and the AAC’s delays in clearing orders, which affected commercial decisions and profitability.

The AAC has been abolished because it is no longer relevant, Singh says, adding, all formalities pertaining to aircraft acquisition will now be carried out by the Directorate General of Civil Aviation.

The announcement aims to “remove duplication and also reduce delays in seeking approval and will do away with the cumbersome procedure which airlines have to follow before acquisition of aircraft,” Singh says.

The AAC had approved the acquisition of 146 aircraft between December 2011 and March this year.

The decision also will help airlines “plan better for future induction of aircraft and also maintain timeliness of acquisition,” the civil aviation minister says. The move is “another major step towards liberalization” in the country’s aviation sector, he adds.

Local airlines have welcomed the decision. Nikos Kardassis, CEO of private carrier Jet Airways, says the move will help airlines plan and manage their fleet requirements much more effectively. Until now, airlines had to secure approval from the AAC twice—once before ordering the aircraft and again before importing it or replacing it. Also, IndiGo recently received permission to import only five of 16 AirbusA320s after the government asked for a detailed plan on how it intends to use the rest of the airplanes. IndiGo has placed orders for 280 Airbus A320s for delivery by 2025 and is waiting to receive over 200 of them.

“India is a highly under-penetrated aircraft market. This is a significant step towards unleashing the true potential of aviation in India whereby the demand-supply anomaly may be addressed over time and millions more may be able to fly one day at lower fares,” says IndiGo President Aditya Ghosh.